Redwood City's historic Fox Theatre to be reopened by music promoter

Entrepreneur Eric Lochtefeld knows he owes his dream of owning a theater to the economic downturn that closed the doors of the historic Fox Theatre.

But as the new operator, Lochtefeld believes he has the answer to keeping the landmark showpiece built in 1928 alive and running.

“We know we can make a go of it for two reasons: I’m not a real estate guy looking to get into the music industry,” he said. “I’m a music industry guy moving into the real estate world.”

Escrow is due to close on the property July 1. In the meantime, Lochtefeld has worked to keep the 9,000 square feet of office and retail space rented, which he believes is key to the 40,000-square-foot theater’s survival.

“I don’t think the Fox failed. It was a piece of real estate that failed,” he said.

The concert promoter plans to move his business, University of Dreams, into part of the theater’s office space. The remainder of the space, up to 4,000 square feet, is leased to Makara, a tech company funded by Shasta Ventures, Sierra Ventures, Marc Andreessen and Ben Horowitz.

“With the office space rented, it takes a lot of the pressure off,” Lochtefeld said. “When we add our rent to their rent, it’s on its way to paying for itself.”

As one of the original promoters of the Vans Warped Tour, Lochtefeld is also banking on his expertise gained from putting on 200 concerts to keep the acts coming to the Fox as well as a smaller venue, the Little Fox.

The club will host a blues festival in July with a grand opening of the Fox in early September.

But the new owner is mindful that he is standing on the shoulders of John Anagnostou, who bought the 82-year-old Fox in 1998 and spent millions of dollars refurbishing the landmark. Its reopening in 2002 is credited with encouraging a renaissance of downtown.

“We take our hat off to John who kept the place open and revitalized downtown Redwood City,” Lochtefeld said. “John did a nice job of building up the dream. But he caught some tough breaks.”

That story is becoming more commonplace in Silicon Valley, where real estate values have fallen 25 percent or more from their previous highs. High-profile properties such as Bordeaux Centre in Sunnyvale and Sunnyvale Town Center were taken from owners with cash-flow problems because of the recession.

Lochtefeld said when he first heard about the financial troubles at the Fox last fall, he offered to help. But it was too late, he said. The money owed by Anagnostou and his partner Mike Monte was estimated at $10 million.

Ultimately, the Fox went on the auction block in November 2009 for $70,000, but did not garner any bids. Earlier this spring, Lochtefeld made a play for the property and approached Stonecrest Managers Inc., which controlled the theater. Lochtefeld actually bid against Anagnostou, who tried to buy back the historic structure. But Lochtefeld had the stronger bid.

Lochtefeld’s broker, Mike Mordaunt of Cresa Partners, said it was a complicated deal given the foreclosure, the auction and the debt. And estimating the value of such a unique property was almost impossible. Lochtefeld would not disclose how much he paid for the theater, which was assessed at $24 million in 2007.

“We went into contract in March and got a fantastic deal,” said Mordaunt, whose partners in the deal were Nate Currie of Cresa, and Lori Lochtefeld of Lacewell Realty. “It was the perfect marriage of a true entrepreneur finding an incredible home.”

Lochtefeld said he doesn’t know why Anagnostou, who owns real estate in downtown Redwood City and runs John Anagnostou Realty, didn’t try harder to rent the office space. But Anagnostou blamed problems on the collapse of the financial world and said the new owners benefited from the woes of others.

Given the fact that downtown has experienced a renaissance during the past 10 years, Anagnostou said he expects the new owners to do well.

“I’m proud that I saved and restored a national historic landmark that many people will benefit from and enjoy,” he said. “I got to own it, brand it. It was a labor of love and took 10 good years of my life.”

City officials agree that Anagnostou restored a gem.

“He really put a lot of time and money and sweat and tears into restoring the whole block,” said Malcolm Smith, public communications manager for Redwood City. “The new operator is standing on the great foundation of what Mr. Anagnostou put in there. It’s a fabulous venue.”